Kuwait is planning to expand its oil production capacity by up to 40 percent, despite a bearish outlook for global demand and years of stagnant growth.

Khaled Al Sabah, managing director at the Kuwait Petroleum Corporation (KPC) and CEO of Kuwait Oil Tanker Company, told an energy conference last week that the Gulf state plans to invest about $30 billion to increase output from 2.8 million barrels per day (bpd) to 3.5 to 4 million bpd by 2035-40.

“It is an ambitious plan, and I think we’re going to reach the target,” Al Sabah said. 

The country is following the strategy of its regional peers, including the UAE and Iraq. The UAE has been investing billions of dollars to raise its output capacity to 5 million bpd.

Analysts said the increase was likely to come from the fields operated by the state owned Kuwait Oil Company and those in the Partitioned Neutral Zone (PNZ), which is shared 50:50 with Saudi Arabia.

Kuwait is Opec’s fifth-largest producer behind Saudi Arabia, Iraq, the UAE and Iran. But its oil industry, which provides about 90 percent of government income, has been facing challenges.

While the Kuwaiti government has been pushing for structural reform, the country’s parliament has been reluctant to implement changes, including allowing foreign investment. The industry has suffered from low levels of project awards for several years.

Sara Akbar, CEO of Oilserv Kuwait, an oilfield services company, said that Kuwait has five major fields which are mature and in decline. In order to maintain the 2.5 million bpd capacity of these fields, it “needs to invest”, she said.

Kuwait is investing in offshore exploration and field development, and in the fields in the north, Akbar said. Four or five rigs are on contract to drill additional exploration areas offshore.

Until recently, maximum drilling depths were around 8,000 feet. “Now we are going deeper and finding these fantastic reservoirs that have very light oil or condensate and gas,” Akbar said.

In July, Kuwait announced a significant discovery of light oil and associated natural gas in its offshore Al-Nokhatha field.

KPC’s CEO, Nawaf Saud Nasir Al-Sabah, said the new discovery’s reserves were equivalent to the country’s production over three years.

But “that field needs capital to produce,” Akbar said.